Mobile shopping transforms holiday retail season

A shopper uses a smartphone when shopping for holiday gifts at Peet's Coffee & Tea in Oakland, Calif. on Friday, Nov. 18, 2011. (LAURA A ODA/STAFF)

If the crowds at the mall seem a bit thinner this holiday season, it may be because more shoppers are at home, buying Christmas gifts on an iPad.

This year, more consumers than ever before are expected to rely on their mobile gadgets as holiday shopping companions. There's even a name for it: "couch commerce."

"We've been talking about mobile for the last five or six years, but 2013 really is the year of mobile," said Pat Dermody, president of the U.S. operations of Retale, an app that collects weekly retail ads.

Consumers are turning to smartphones and tablets not only to make purchases, but also for coupons and promotions, to search for gifts and compare prices.

Retailers are responding too, trotting out snazzy new apps and mobile sites to encourage shoppers to buy their brands.

Some experts say that retailers' ability to connect with shoppers on their mobile gadgets may determine the success of their holiday season -- and their entire year. Many retailers rely on the holiday shopping season for up to 40 percent of their annual revenue.

"It's becoming a bit of a tipping point," said Kelly Pedersen, retail and consumer director for global research and consulting firm PwC in San Francisco. "There is a pretty big basket of spending going to mobile."

Indeed. Shoppers are expected to spend $10 billion using mobile gadgets in the last three quarters of this year, up from $5.8 billion in the third quarter and $7.2 billion in the fourth quarter of 2012, according to Internet technology company comScore.

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And consumers are expected to do 30 percent of their online browsing and buying on a mobile device.

Experts add that tablets have been one of the biggest drivers of mobile browsing and purchases -- about 41 percent of consumers will use their tablets to go online to look at and purchase gifts over the next few weeks, making them almost as popular as desktops for holiday shopping, according to research group Burst Media.

"People prefer to be at home on their couch shopping from their laptop and iPad," said Gidi Fisher, founder and chief executive of PoachIt, an online coupon service and price tracker. "There's more variety, there's better prices and it's just easier."

The number of consumers who shop from the couch was up nearly 350 percent between 2011 and 2012, said PayPal spokeswoman Jennifer Hakes.

And they're not only buying only CDs, books or cheap Secret Santa gifts; PayPal reports shoppers are buying diamond bracelets from their smartphones.

Retailers that have evolved with their high-tech consumers are rolling out mobile sites that load quicker and fit inside a smartphone screen, and apps that offer more perks and services than a shopper may get in the store, experts say. Macy's app gives consumer access to videos, product reviews, gift registries, instant coupons and a mobile payments system. The Disney Store recently re-launched its app to send messages to shoppers on their mobile devices offering exclusive discounts.

And to encourage shoppers to move their tablets from the couch to the stores, retailers have created mobile features that make the in-store shopping experience quicker and easier.

Nordstrom offers mobile checkout, much like Apple (AAPL) stores. Other stores provide customers with tablets to browse the entire store inventory and apps for in-store navigation, so shoppers don't have to search for items. Toys R Us has built an app that lets shoppers -- or their children -- use a smartphone to scan the bar code on items to create a Christmas list. Toys R Us will also match a competitor's prices if shoppers come into the store and show the advertisement on their smartphone.

Chris Hill, vice president of marketing at Mobidia, which tracks app use among 2 million mobile users worldwide, said mobile apps from big brands, such as Walmart, Best Buy and Gap, are used as frequently among the consumers who download them as any other app on their phone -- except for Facebook and Twitter.

Still, while the number of retail apps is on the rise, some niche and high-end brands are just starting to tap the mobile market. Some are hiring Silicon Valley tech companies to build their apps, while others have scraped together resources to build their own.

"To build a good mobile app takes a significant investment -- $50,000 to $100,000 at the low end," Hill said.

Cost is one reason many mom-and-pop stores and small chains haven't made the leap to mobile. Another is that selling to customers on mobile also requires that merchants know exactly how much inventory they have at any given time, a challenge that even giants such as Google (GOOG) and Walmart have struggled with.

"They are feeling pressure, but in general, have they been able to adapt?" Pedersen asked. "The smaller retailers, probably not."

Contact Heather Somerville at 510-208-6413. Follow her at Twitter.com/heathersomervil.

Holiday Mobile Shopping numbers

46% of shoppers will use smartphones to shop -- meaning both browsing and buying -- for holiday gifts41% will use tablets for holiday shopping33% of smartphone owners ages 18 to 34 will purchase gifts from their phone30% of visits to a retailer's website will come from a smartphone or tablet40% of shoppers will shop from mobile devices while they are in a store72% of smartphone owners use at least one shopping app